A Kurdish charity provided a £20,000, zero-interest loan twice the size of its reported annual income to enable two members of the local community to buy a house, a Charity Commission inquiry has found.
In a report published by the commission today, the Ipswich Kurdish Islamic Cultural Centre is criticised for its poor financial management after it apparently banked £207,811 more between 1 January 2012 and 30 January 2015 than its internal financial records showed.
The charity also paid a trustee £1,360.60 between March and April 2016, the report says, but the charity could not provide evidence to show a formal decision to make the payment had been made.
The commission’s interaction with the charity began when it made a visit in March 2015 because the charity’s 2013 accounts were 150 days overdue. The visit uncovered no legitimate reason for the delay and the accounts were eventually filed in June that year.
The regulator opened a statutory inquiry into the charity in November 2015 when it failed to submit its 2014 accounts on time.
The report says the regulator believed the charity was unable to provide sufficient evidence to show and account for the charity’s income and spending, and that it had inadequate financial controls in place.
The charity was also primarily dealing in cash and without proper supporting documentation, the report says, and was unable to fully comply with orders from the commission to provide information.
In July 2015, Ipswich Borough Council got in touch with the regulator about a right-to buy application in which the tenants were meeting part of the purchase price for a house through a £20,000 interest-free loan with repayments of £500 a month.
The Charity Commission’s website shows that for the year to 30 November 2015 the charity had an income of £7,480 and spent £7,285.
The report says the commission saw no evidence of the loan’s repayment in bank account statements until 3 August 2015 and was unsure how making the loan was in the charity’s best interests.
The loan was eventually repaid early and completely between January and March 2016.
A further visit in July 2016 raised further concerns about mistakes in the charity’s 2015 accounts, a lack of building and contents insurance for the charity’s property, inadequate records and unauthorised salary payments made to a trustee, the report says.
It adds that the charity did not have a safeguarding policy in place despite running weekend Koran and Arabic lessons for children.
The report says the commission has ordered the charity to address the problems identified and will be monitoring its compliance.
The charity did not respond to a request for comment before this story was published.